Value Investing And Dividend Investing

Value investing and dividend investing are two very powerful ways to grow your money. So, what exacly are they and how can you use them?

Dividend investing is the proccess of buying the best dividend paying stocks and holding onto them for the long term. The idea is to get the cash flow that is being produced from these investments so that you will be able to create passive income.

The idea is to save up and invest enough money into dividend stocks that the passive cash flow they bring will actually support you. Passive income from things like dividends where you don’t have to work to receive it can be the best type of income so this strategy can be pretty powerful.

Value investing works a little differently. It doesn’t look for ways to produce income off of your stock, instead it looks for ways to grow your income over the long term. It uses formulas like the Price to Earnings ratio to figure out if a stock is overvalued or undervalued.

The idea here is to buy stocks in strong companies that have been beaten down by investors. Hopefully the prices will bounce back up and all investors will benefit from it.

Which one works better? These two strategies can actually complement each other if done right. Value investing can lead to large growth over the long term while dividend investing can lead to a large income once you have enough capital to invest. Together these strategies can help you to build up your wealth and eventually retire wealthy.

This entry was posted
on Wednesday, March 31st, 2010 at 9:37 am and is filed under investing, stocks, Uncategorized.
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